Finance Ministry suggests sharply increasing tobacco and alcohol excise duty rates

The suggestions to increase the excise duty rates are listed in the draft amendments project for the Tax Code.

Specifically, the excise duty rate on smoking and pipe tobacco, cigars and cigarillos may grow by 45%, cigarettes with no filter and cigarettes with a cardboard holder- by 81.4%. In absolute numbers: from 233.800 up to 339.000 ruobles for 1 kilogram of tobacco, from 13.600 up to 19.700 roubles for one cigar, from 203.400 up to 294.900 roubles for a thousand cigarillos, from 60.200 up to 109.200 roubles for a thousand filterless cigarettes, BelaPAN reports.

The number of price ranges in suggested to be narrowed down from 3 to 2, when imposing excise duties on cigarettes with a filter. In the second half-year of 2013 the excise duty is 100.400 roubles for a thousand cigarettes, which cost up to 325.000 roubles (which means if a pack’s retail price is not over 6.500 roubles, the excise duty on it is 2.008 roubles); 160.600 roubles for a thousand cigarettes, which cost from 325.000 to 450.000 roubles (price - 6.500—9.000 a pack, excise duty - 3.212 per pack); 180.600 roubles for a thousand cigarettes, which cost over 450.000 roubles (price – over 9.000 roubles a pack, excise duty - 3.612 per pack). The Finance Ministry’s initiative is to impose 145.600 rouble excise duty for a thousand cigarettes, which cost below 375.000 roubles (price – below 7.500 a pack, excise duty – 2.912 per pack) and 247.600 roubles for a thousand cigarettes, which cost over 375.000 roubles (price – over 7.500 a pack, excise duty - 4.952 roubles per pack).

If we consider the upper price range (from 9.000 roubles a pack now and over 7.500 in 2014), then the excise duty will increase by 37%.

They suggest to increase the excise duty on ethyl alcohol by 27% (from 29.100 to 37.000 roubles per liter), fruit fortified vines – by 2.1 times (from 50.200 to 106.400 roubles). The excise duty on natural sparkling vine, champagnes, carbonated and fizzy vines would grow by 10,6% ( from 4.700 to 5.200), natural fruit and berry vines and ciders – by 9% (from 780 to 850 roubles), beer – by 10.3%.

We would remind that in the draft amendments project there is also a paragraph on increasing the excise duty on car fuel by 2.4-3 times.